BILLS OF EXCHANGE

IX. FORM AND INTERPRETATION

Sec. 126. Bill of exchange, defined. - A bill of
exchange is an unconditional order in writing
addressed by one person to another, signed
by the person giving it, requiring the person to
whom it is addressed to pay on demand or at
a fixed or determinable future time a sum
certain in money to order or to bearer.
Sec. 127. Bill not an assignment of funds in
hands of drawee. - A bill of itself does not
operate as an assignment of the funds in the
hands of the drawee available for the
payment thereof, and the drawee is not liable
on the bill unless and until he accepts the
same.
Sec. 128. Bill addressed to more than one
drawee. - A bill may be addressed to two or
more drawees jointly, whether they are
partners or not; but not to two or more
drawees in the alternative or in succession.
Sec. 129. Inland and foreign bills of
exchange. - An inland bill of exchange is a bill
which is, or on its face purports to be, both
drawn and payable within the Philippines.
Any other bill is a foreign bill. Unless the
contrary appears on the face of the bill, the
holder may treat it as an inland bill.
Sec. 130. When bill may be treated as
promissory note. - Where in a bill the drawer
and drawee are the same person or where
the drawee is a fictitious person or a person
not having capacity to contract, the holder
may treat the instrument at his option either
as a bill of exchange or as a promissory note.
Sec. 131. Referee in case of need. - The
drawer of a bill and any indorser may insert
thereon the name of a person to whom the
holder may resort in case of need; that is to
say, in case the bill is dishonored by nonacceptance or non-payment. Such person is
called a referee in case of need. It is in the
option of the holder to resort to the referee in
case of need or not as he may see fit.

XVI. PROMISSORY NOTES AND CHECKS

Sec. 184. Promissory note, defined. - A
negotiable promissory note within the
meaning of this Act is an unconditional
promise in writing made by one person to
another, signed by the maker, engaging to
pay on demand, or at a fixed or determinable
future time, a sum certain in money to order
or to bearer. Where a note is drawn to the
maker's own order, it is not complete until
indorsed by him.
Sec. 185. Check, defined. - A check is a bill
of exchange drawn on a bank payable on
demand. Except as herein otherwise
provided, the provisions of this Act applicable
to a bill of exchange payable on demand
apply to a check.
Sec. 186. Within what time a check must be
presented. - A check must be presented for
payment within a reasonable time after its
issue or the drawer will be discharged from
liability thereon to the extent of the loss
caused by the delay.
Sec. 187. Certification of check; effect of. Where a check is certified by the bank on
which it is drawn, the certification is
equivalent to an acceptance.
Sec. 188. Effect where the holder of check
procures it to be certified. - Where the holder
of a check procures it to be accepted or
certified, the drawer and all indorsers are
discharged from liability thereon.
Sec. 189. When check operates as an
assignment. - A check of itself does not
operate as an assignment of any part of the
funds to the credit of the drawer with the
bank, and the bank is not liable to the holder
unless and until it accepts or certifies the
check.

XV. BILLS IN SET

Sec. 178. Bills in set constitute one bill. Where a bill is drawn in a set, each part of the
set being numbered and containing a
reference to the other parts, the whole of the
parts constitutes one bill.
Sec. 179. Right of holders where different
parts are negotiated. - Where two or more
parts of a set are negotiated to different
holders in due course, the holder whose title
first accrues is, as between such holders, the
true owner of the bill. But nothing in this
section affects the right of a person who, in
due course, accepts or pays the parts first
presented to him.
Sec. 180. Liability of holder who indorses two
or more parts of a set to different persons.
- Where the holder of a set indorses two or
more parts to different persons he is liable
on every such part, and every indorser
subsequent to him is liable on the part he has
himself indorsed, as if such parts were
separate bills.
Sec. 181. Acceptance of bill drawn in sets. The acceptance may be written on any part
and it must be written on one part only. If the
drawee accepts more than one part and
such accepted parts negotiated to different
holders in due course, he is liable on every
such part as if it were a separate bill.
Sec. 182. Payment by acceptor of bills drawn
in sets. - When the acceptor of a bill
drawn in a set pays it without requiring the
part bearing his acceptance to be delivered
up to him, and the part at maturity is
outstanding in the hands of a holder in due
course, he is liable to the holder thereon.
Sec. 183. Effect of discharging one of a set. Except as herein otherwise provided,
where any one part of a bill drawn in a set is
discharged by payment or otherwise, the
whole bill is discharged.

I. FORM AND INTERPRETATION

Section 1. Form of negotiable instruments. An instrument to be negotiable must conform
to the following requirements:
(a) It must be in writing and signed by the
maker or drawer;
(b) Must contain an unconditional promise or
order to pay a sum certain in money;
(c) Must be payable on demand, or at a fixed
or determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a
drawee, he must be named or otherwise
indicated therein with reasonable certainty.
Sec. 2. What constitutes certainty as to sum.
- The sum payable is a sum certain within
the meaning of this Act, although it is to be
paid:
(a) with interest; or
(b) by stated installments; or
(c) by stated installments, with a provision
that, upon default in payment of any
installment or of interest, the whole shall
become due; or
(d) with exchange, whether at a fixed rate or
at the current rate; or
(e) with costs of collection or an attorney's
fee, in case payment shall not be
made at maturity.
Sec. 3. When promise is unconditional. - An
unqualified order or promise to pay is
unconditional within the meaning of this Act
though coupled with:
(a) An indication of a particular fund out of
which reimbursement is to be made or
a particular account to be debited with the
amount; or
(b) A statement of the transaction which gives
rise to the instrument.
But an order or promise to pay out of a
particular fund is not unconditional.
Sec. 4. Determinable future time; what
constitutes. - An instrument is payable at a
determinable future time, within the meaning
of this Act, which is expressed to be payable:
(a) At a fixed period after date or sight; or
(b) On or before a fixed or determinable
future time specified therein; or
(c) On or at a fixed period after the
occurrence of a specified event which is

certain to happen, though the time of

happening be uncertain. An instrument
payable upon a contingency is not negotiable,
and the happening of the event does not cure
the defect.
Sec. 5. Additional provisions not affecting
negotiability. - An instrument which contains
an order or promise to do any act in addition
to the payment of money is not negotiable.
But the negotiable character of an instrument
otherwise negotiable is not affected by a
provision which:
(a) authorizes the sale of collateral securities
in case the instrument be not paid
at maturity; or
(b) authorizes a confession of judgment if the
instrument be not paid at maturity; or
(c) waives the benefit of any law intended for
the advantage or protection of the
obligor; or
(d) gives the holder an election to require
something to be done in lieu of
payment of money.
But nothing in this section shall validate any
provision or stipulation otherwise illegal.
Sec. 6. Omissions; seal; particular money. The validity and negotiable character of an
instrument are not affected by the fact that:
(a) it is not dated; or
(b) does not specify the value given, or that
any value had been given therefor; or
(c) does not specify the place where it is
drawn or the place where it is payable; or
(d) bears a seal; or
(e) designates a particular kind of current
money in which payment is to be
made. But nothing in this section shall alter or
repeal any statute requiring in certain cases
the nature of the consideration to be stated in
the instrument.
Sec. 7. When payable on demand. - An
instrument is payable on demand:
(a) When it is so expressed to be payable on
demand, or at sight, or on
presentation; or
(b) In which no time for payment is
expressed.
Where an instrument is issued, accepted, or
indorsed when overdue, it is, as regards
the person so issuing, accepting, or indorsing
it, payable on demand.

Sec. 8. When payable to order. - The

instrument is payable to order where it is
drawn payable to the order of a specified
person or to him or his order. It may be drawn
payable to the order of:
(a) A payee who is not maker, drawer, or
drawee; or
(b) The drawer or maker; or
(c) The drawee; or
(d) Two or more payees jointly; or
(e) One or some of several payees; or
(f) The holder of an office for the time being.
Where the instrument is payable to order, the
payee must be named or otherwise indicated
therein with reasonable certainty.
Sec. 9. When payable to bearer. - The
instrument is payable to bearer:
(a) When it is expressed to be so payable; or
(b) When it is payable to a person named
therein or bearer; or
(c) When it is payable to the order of a
fictitious or non-existing person, and such
fact was known to the person making it so
payable; or
(d) When the name of the payee does not
purport to be the name of any
person; or
(e) When the only or last indorsement is an
indorsement in blank.
Sec. 10. Terms, when sufficient. - The
instrument need not follow the language of
this Act, but any terms are sufficient which
clearly indicate an intention to conform to the
requirements hereof.
Sec. 11. Date, presumption as to. - Where
the instrument or an acceptance or any
indorsement thereon is dated, such date is
deemed prima facie to be the true date of the
making,
drawing,
acceptance,
or
indorsement, as the case may be.
Sec. 12. Ante-dated and post-dated. - The
instrument is not invalid for the reason only
that it is ante-dated or post-dated, provided
this is not done for an illegal or fraudulent
purpose. The person to whom an instrument
so dated is delivered acquires the title thereto
as of the date of delivery.
Sec. 13. When date may be inserted. - Where
an instrument expressed to be payable

at a fixed period after date is issued undated,

or where the acceptance of an instrument
payable at a fixed period after sight is
undated, any holder may insert therein the
true date of issue or acceptance, and the
instrument shall be payable accordingly. The
insertion of a wrong date does not avoid the
instrument in the hands of a subsequent
holder in due course; but as to him, the date
so inserted is to be regarded as the true date.
Sec. 14. Blanks; when may be filled. - Where
the instrument is wanting in any material
particular, the person in possession thereof
has a prima facie authority to complete it by
filling up the blanks therein. And a signature
on a blank paper delivered by the person
making the signature in order that the paper
may be converted into a negotiable
instrument operates as a prima facie authority
to fill it up as such for any amount. In order,
however, that any such instrument when
completed may be enforced against any
person who became a party thereto prior to
its completion, it must be filled up strictly in
accordance with the authority given and
within a reasonable time. But if any such
instrument, after completion, is negotiated to
a holder in due course, it is valid and effectual
for all purposes in his hands, and he may
enforce it as if it had been filled up strictly in
accordance with the authority given and
within a reasonable time.
Sec. 15. Incomplete instrument not delivered.
- Where an incomplete instrument has not
been delivered, it will not, if completed and
negotiated without authority, be a valid
contract in the hands of any holder, as
against any person whose signature was
placed thereon before delivery.
Sec. 16. Delivery; when effectual; when
presumed. - Every contract on a negotiable
instrument is incomplete and revocable until
delivery of the instrument for the purpose of
giving effect thereto. As between immediate
parties and as regards a remote party other
than a holder in due course, the delivery, in
order to be effectual, must be made either by
or under the authority of the party making,
drawing, accepting, or indorsing, as the case
may be; and, in such case, the delivery may
be shown to have been conditional, or for a

special purpose only, and not for the purpose

of transferring the property in the instrument.
But where the instrument is in the hands of a
holder in due course, a valid delivery thereof
by all parties prior to him so as to make them
liable to him is conclusively presumed. And
where the instrument is no longer in the
possession of a party whose signature
appears thereon, a valid and intentional
delivery by him is presumed until the contrary
is proved.
Sec. 17. Construction where instrument is
ambiguous. - Where the language of the
instrument is ambiguous or there are
omissions therein, the following rules of
construction apply:
(a) Where the sum payable is expressed in
words and also in figures and there is
a discrepancy between the two, the sum
denoted by the words is the sum
payable; but if the words are ambiguous or
uncertain, reference may be had to
the figures to fix the amount;
(b) Where the instrument provides for the
payment of interest, without specifying
the date from which interest is to run, the
interest runs from the date of the
instrument, and if the instrument is undated,
from the issue thereof;
(c) Where the instrument is not dated, it will
be considered to be dated as of the
time it was issued;
(d) Where there is a conflict between the
written and printed provisions of the
instrument, the written provisions prevail;
(e) Where the instrument is so ambiguous
that there is doubt whether it is a bill or
note, the holder may treat it as either at his
election;
(f) Where a signature is so placed upon the
instrument that it is not clear in what
capacity the person making the same
intended to sign, he is to be deemed an
indorser;
(g) Where an instrument containing the word
"I promise to pay" is signed by two
or more persons, they are deemed to be
jointly and severally liable thereon.
Sec. 18. Liability of person signing in trade or
assumed name. - No person is liable on
the instrument whose signature does not
appear thereon, except as herein otherwise

expressly provided. But one who signs in a

trade or assumed name will be liable to the
same extent as if he had signed in his own
name.
Sec. 19. Signature by agent; authority; how
shown. - The signature of any party may be
made by a duly authorized agent. No
particular form of appointment is necessary
for this purpose; and the authority of the
agent may be established as in other cases
of agency.
Sec. 20. Liability of person signing as agent,
and so forth. - Where the instrument contains
or a person adds to his signature words
indicating that he signs for or on behalf of a
principal or in a representative capacity, he is
not liable on the instrument if he was duly
authorized; but the mere addition of words
describing him as an agent, or as filling a
representative character, without disclosing
his principal, does not exempt him from
personal liability.
Sec. 21. Signature by procuration; effect of. A signature by "procuration" operates as
notice that the agent has but a limited
authority to sign, and the principal is bound
only in case the agent in so signing acted
within the actual limits of his authority.
Sec. 22. Effect of indorsement by infant or
corporation.- The indorsement or assignment
of the instrument by a corporation or by an
infant
passes
the
property
therein,
notwithstanding that from want of capacity,
the corporation or infant may incur no liability
thereon.
Sec. 23. Forged signature; effect of. - When a
signature is forged or made without the
authority of the person whose signature it
purports to be, it is wholly inoperative, and no
right to retain the instrument, or to give a
discharge therefor, or to enforce payment
thereof against any party thereto, can be
acquired through or under such signature,
unless the party against whom it is sought to
enforce such right is precluded from
setting up the forgery or want of authority.